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News

6. May 2020

SCHMOLZ + BICKENBACH results heavily impacted by COVID-19

  • Cautious recovery in demand abruptly interrupted by COVID-19. Sales volume in Q1 2020 shrinks to 457 kilotons from 551 kilotons in prior-year quarter
  • Average sales price per ton falls to EUR 1,542, from EUR 1,605 in Q1 2019 and EUR 1,595 in Q4 2019
  • Adjusted EBITDA of EUR –6.1 million comes in considerably below EUR 42.2 million​ recorded in same quarter of previous year
  • Lower earnings contribution and seasonally higher working capital led to a negative free cash flow of EUR –87.3 million
  • Net debt reduced to EUR 609 million from EUR 798 million at the end of 2019 due to​ successful capital increase in Q1 2020
  • Outlook for 2020: Due to COVID-19 no reliable estimate for adjusted EBITDA possible

 

CEO Clemens Iller said: “After a significant decline in business activities toward the end of last year, the start of the 2020 fiscal year was, as expected, marked by a cautious low-level recovery. This trend continued until about mid-March, accompanied by a moderate improvement in order books. However, the second half of the month witnessed an even sharper decline in demand in the wake of the COVID-19 crisis, which left a big dent in both volumes and prices. The complete shutdown of all business activities of major European automobile manufacturers and their suppliers had an especially abrupt effect on demand. From our current perspective, we do not expect a gradual normalization of demand to set in until the end of the first half of 2020 at the earliest, with a possible continued recovery expected in the second half of the year. While we are increasingly concentrating on the implementation of the restructuring plan, a reliable estimate of adjusted EBITDA is not possible at this time due to the existing uncertainties.”

 

Financial key figures

 

SCHMOLZ + BICKENBACH Group

Unit

Q1 2020

Q1 2019

Δ in  %

Sales volume

kilotons

457

551

–17.1

Revenue

in EUR mn

704.5

884.2

–20.3

Average sales price

EUR/t

1,541.6

1,604.7

–3.9

Adjusted EBITDA

in EUR mn

–6.1

42.2

EBITDA

in EUR mn

–7.6

38.8

Adjusted EBITDA margin

%

–0.9

4.8

EBITDA margin

%

–1.1

4.4

EBIT

in EUR mn

–31.7

13.3

Earnings before taxes

in EUR mn

–43.7

–0.3

Group result

in EUR mn

–42.3

0.7

Investments

in EUR mn

14.6

22.5

–35.1

Free cash flow

in EUR mn

–87.3

–23.7

 

Unit

31/3/2020

31/12/2019

Δ in  %

 

 

 

 

 

Net debt

in EUR mn

608.6

797.6

–23.7

Shareholders’ equity

in EUR mn

451.9

183.8

Gearing

%

134.7

433.9

Net debt/adj. EBITDA LTM (leverage)

x

209.9

15.6

Balance sheet total

in EUR mn

1,970.6

1,919.1

2.7

Equity ratio

%

22.9

9.6

Employees as of closing date

Number

10,236

10,318

–0.8

Capital employed

in EUR mn

1,466.6

1,384.1

6.0

 

Unit

Q1 2020

Q1 2019

Δ in  %

 

 

 

 

 

Earnings per share 1)

EUR/CHF

–0.02/–0.02

0.00/0.00

Equity per share 2)

EUR/CHF

0.22/0.23

0.19/0.21

Share price high/low

CHF

0.340/0.126

0.617/0.435

 

1) The Group result per share is based on the net income (loss) of the Group after deduction of the portions attributable to non-controlling interests.

2) As of March 31, 2020, and as of December 31, 2019.

 

Lucerne, May 6, 2020 – SCHMOLZ + BICKENBACH, one of the world’s leading special long steel companies, today reported a 17.1 % decrease in sales volumes, down to 457 kilotons from 551 kilotons in the first quarter of 2019. Revenue declined by 20.3 % from EUR 884 million to EUR 705 million. The financial figures for the first quarter of 2020 were marked by an initially cautious recovery, which was abruptly interrupted by the COVID-19 crisis. The decline in demand caused by production stoppages is reflected in reduced sales volumes and revenue. Adjusted EBITDA, net income and free cash flow were negative. Net debt was down 23.7 % compared with the end of 2019 as a result of the refinancing.

 

Business development in the first quarter of 2020

 

At 457 kilotons, 17.1 % less steel was sold in the first quarter of 2020 than in the prior-year quarter, where the volume was 551 kilotons. The fall is attributable to decreasing sales volume for quality & engineering steel, which were down 21.0 % on the back of the sharp drop in demand from the automotive industry, which is having a particularly strong impact on this product group. Sales volumes also decreased compared with the prior-year quarter in the two other product groups, stainless steel and tool steel, but with less sharp declines of 3.2 % and 10.8 % respectively.

 

The average sales price per ton of steel came to EUR 1,542 for the first quarter of 2020 and was therefore lower than the prior-year figure of EUR 1,605 per ton. The decline is mainly due to lower scrap and alloy surcharges, but also to lower base prices.

 

The fall in prices and sales volume resulted in revenue of EUR 704.5 million, down 20.3 % on the prior-year quarter. At 31.5 %, the decline was most pronounced in the quality & engineering steel product group. Revenue from stainless steel was down 3.6 %, and from tool steel 15.7 %. Geographically, all regions and countries suffered a double-digit decline in revenue year on year.

 

Adjusted for one-time effects, EBITDA totaled EUR –6.1 million (Q1 2019: EUR 42.3 million), which was considerably below the prior-year quarter. The one-off effects amounted to EUR 1.5 million and are attributable to consulting services for the efficiency improvement programs. Including these effects, EBITDA fell to EUR –7.6 million (Q1 2019: EUR 38.8 million). As a result, the adjusted EBITDA margin shrank to –0.9 % (Q1 2019: 4.8 %), and the EBITDA margin to –1.1 % (Q1 2019: 4.4 %).

 

The financial result was EUR –12.0 million compared with EUR –13.6 million in the first quarter of 2019 due to a lower financial expense. Owing to the developments mentioned earlier, earnings before taxes (EBT) came to EUR –43.7 million (Q1 2019: EUR –0.3 million). As a result of negative EBT, tax income of EUR 1.4 million was recorded. In the first quarter of 2020, the Group posted a loss of EUR –42.3 million, compared with the Group result of EUR 0.7 million in the first quarter of 2019.

 

A lower profit contribution and seasonally higher working capital led to a negative free cash flow of EUR –87.3 million.

 

At EUR 608.6 million, net debt was significantly lower than the figure of EUR 797.6 million as of December 31, 2019. In addition, due to the change of control, the repayment of tendered bonds of EUR 328.8 million was made in March. Net debt in relation to adjusted EBITDA (leverage, based on the last twelve months) rose sharply compared to December 31, 2019 due to the negative EBITDA.

 

Outlook for the 2020 fiscal year

 

SCHMOLZ + BICKENBACH will direct increased attention in 2020 on short-term liquidity protection measures to safely overcome the COVID-19 crisis and the resulting slump in demand, especially in the automotive industry. As part of the structural improvements, the focus will be on the consistent implementation of the turnaround plan. Priority will be placed here on the transformation and restructuring of Ascometal, the turnaround of Finkl Steel in North America and the restructuring of Steeltec, as well as personnel measures and operational improvements at DEW.

 

In view of the numerous uncertainties, particularly as a result of the COVID-19 crisis, forecasts for the 2020 financial year are still subject to a high degree of uncertainty.

 

From our current perspective, we do not expect a gradual normalization of demand to set in until the end of the first half of 2020 at the earliest, with a possible continued recovery expected in the second half of the year. While we are increasingly focusing on the implementation of the restructuring plan, a reliable estimate of adjusted EBITDA is not possible at this time due to the existing uncertainties.

 

– END

 

For further information:

 

Daniel Geiger
Vice President Investor Relations, CSR,

Corporate Accounting & Communications

Phone: +41 (0) 41 581 41 60

d.geiger@schmolz-bickenbach.com